What You Need to Know About Renewing a Lease with Your Tenant

Close-up Of A Human Hand Filling Lease Agreement Form With Pen

When a tenant’s lease is coming to an end, you’ll have to make a decision: whether to renew the lease or part ways. If the tenant has been reliable, responsible, and a good resident overall, the easiest choice is to renew the lease. Finding a new tenant can be stressful, even with screening services. It can be time-consuming to market the property, sort through applications, and show the unit. And the longer it takes to find a new tenant, the more expensive the process becomes.

Here’s a look at why renewing a lease is beneficial, and some tips on how to go about doing it. Please note that this is for informational purposes only and is not intended as legal advice.

Why Should I Renew a Lease?

First, what does it mean to renew a lease? Renewing the lease typically means signing your existing tenant to a new lease, with terms that are the same or similar to their current lease. This can also include an extension of their current lease, which keeps the same terms and extends out the end date.

Here are a few benefits of renewing a lease:

  1. Eliminates the cost of finding a new tenant

There can be many costs associated with finding a new tenant. These include:

  • Advertising
  • Cleaning or repair costs after the tenant has moved out
  • Maintenance (like replacing old carpet, fixtures, or appliances)
  • HOA dues (if applicable)
  1. Reduces the risk of vacancy

If you don’t already have a tenant lined up to move in when the current tenant moves out, you risk losing income from the vacant property. Not only do you lose out on rental income, but you’ll also have to continue to pay for utilities or other expenses associated with the property.

  1. Minimize stress

Searching for a new tenant can be stressful so once you find a good tenant, it’s best to keep them. There’s certainty with your current tenants – you know what to expect and already have an established relationship. Even though tenant screening and verification give you an excellent idea of a tenant’s responsibility level and rental history, it doesn’t necessarily tell you what an applicant would be like on a personal level. If your current tenant is paying their rent on time and does a good job of keeping up the property, it’s worthwhile to renew the lease.

  1. Save time overall

When a tenant moves out, there’s often quite a bit of work involved to get the property ready for the next tenant. This includes cleaning, maintenance, preparing a listing, looking over applications, interviews, showing the property, deciding who to screen, and making a final decision. Retaining good tenants eliminates these steps and frees up time for you to focus on other aspects of your business.

Tenant Retention

Something to consider: A Zillow trend report from 2018 found that nearly half of all renters (46%) who had moved within the past 12 months had plans to move again within the next year. So how can you ensure that you keep good, reliable tenants? Here are a few things that can help:

  • Make them feel welcome at the property
  • Help them feel connected with the neighborhood by giving pointers on things to do, where to shop or eat, etc.
  • Be available and easy to contact
  • Respond to questions, concerns, or requests quickly
  • Provide ample notice for changes or problems that could affect them
  • Allow some personalization of the unit or property
  • Be considerate of their privacy and rental needs
  • Keep up on maintenance
  • Keep features of the property updated
  • Enforce rules fairly and consistently
  • Foster a personal (but still professional) relationship

Click here for more tips on how to get a good tenant to renew their lease.

Do I Have to Renew a Lease?

Whether or not you’ll have to renew a lease depends on your local laws; some areas have laws that restrict or limit a landlord’s ability to not renew a lease. However, in most cases, landlords do not have to renew a lease. Likewise, a tenant can also choose not to sign a lease renewal. If you’re unsure what the local laws are surrounding lease renewals, it’s best to consult with legal counsel to ensure you’re doing everything by the book.

Depending on where your property is located, landlords generally have 30 days prior to the end of the lease to notify a tenant if the lease won’t be renewed. This can be done through a written notice of termination or a non-renewal of lease letter, which confirms the end date of the lease and move-out instructions.

Some areas don’t require you to include a reason for terminating the lease once it ends, however, you may be prohibited from ending a lease in retaliation or if it’s discriminatory towards a protected class under fair housing laws. Some reasons to consider not renewing the lease include:1

  • Unreliability, such as consistent late rent payments
  • Damage to the property beyond normal wear and tear
  • Lease violations
  • Frequent complaints from neighbors or other tenants
  • You’re selling the property or have hired a property management company

How Do I Renew a Lease?

If you’ve decided you’d like to renew a current tenant’s lease, it’s recommended to send them a renewal letter to let them know you’d like to continue renting to them. Make sure to include whether the terms of the new lease will be the same or if you plan on making adjustments. The renewal letter (also called a lease renewal agreement) serves two purposes: it informs your tenant that the lease will be ending soon and it also allows you to gauge their level of interest in continuing to rent your property.

The laws surrounding lease renewal letters vary from location to location, but typically they should be sent to the tenant at least 90 days before the lease expires. This will give your tenant plenty of time to make a decision and find new housing if they don’t plan to renew.

How Do I Write a Lease Renewal Letter?

Here’s an overview of what you should include while writing your lease renewal letter:

  • Your name and contact information
  • The name and contact information for your tenant
  • The address of the rental property and unit number (if applicable)
  • A reference to the original lease (or better yet, a copy of it)
  • Your renewal terms or any changes to the original terms of the lease
  • The new rent amount (if applicable)
  • The proposed end date of the lease

Once you’ve written up the lease renewal letter, make sure to attach a copy of it to the original lease as documentation.

Negotiating Lease Renewal Terms

In some cases, your tenant may want to negotiate the lease renewal terms. Whether you want to negotiate is completely up to you. If you’d like to keep the tenant at your property though, it’s generally best to listen to their terms and consider working with them to create a new agreement. Some of the most common things changed in a lease renewal include:

  • The price of monthly rent
  • The cost of the security deposit
  • How payments can be made
  • The duration of the lease
  • Policies or rules for the property
  • Renter’s insurance requirements

Month-to-Month Leases

If your tenant wants to sign a month-to-month lease, it’s important to agree to the terms or terminate the lease before it expires. In some states, a lease may automatically carry over to a month-to-month lease unless it’s terminated. Month-to-month leases generally renew automatically each month unless the landlord or the tenant notifies the other party that they want to terminate the lease. In some areas, the tenant or the landlord is required to provide a 30-day written notice if they’re planning to terminate it; other areas require a 90-day notice. Be sure to read up on your local laws and consult with an attorney if you have any questions.

The Tenant Doesn’t Want to Renew

If the tenant doesn’t want to renew, they will typically be required to notify you in writing. However, there are some circumstances where they may not be required to provide notice. This includes situations like military deployment or being the victim of domestic abuse. If the tenant doesn’t want to renew, make sure to send them written confirmation of the lease end date and move-out instructions.

The Tenant Stays After the Lease Expires

Although it’s unlikely, what should you do if the tenant stays at the property after the lease has expired? You have a couple of options. If they continue to pay rent and you accept the money, this may be legally seen as a renewal of the lease in some locations. If they continue to live at the property without paying rent or otherwise violates the terms of the lease, you have the option to evict them. Regardless of what the situation is, you should always consult with an attorney to determine your legal rights and the best course of action.


Landlords Property Managers Contact TSCI